Re Ansbacher (Cayman) Ltd

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 17 May 2001
• Court: Grand Court (Cayman Islands)
• Date: 17 May 2001

Grand Court

(Smellie, C.J.)

IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED

A.J. Jones for the applicant;

R.D. Alberga, Q.C. and B.L. Ashenheim for Poinciana Fund Ltd. and Worldwide Services Ltd.;

M. Todd, Q.C., P.S. Boni and C.J. Narborough for Hamilton Ross Ltd.;

A. Bueno, Q.C. and H. Robinson for the Irish inspectors;

D.T.J. McCahill for another Ansbacher client;

S. Hall-Jones, Senior Crown Counsel, for the Attorney General as amicus curiae.

Cases cited:

(1) Astec (BSR) PLC, Re, [1998] 2 BCLC 556; [1999] BCC 59, distinguished.

(2) Att. Gen. v. Bank of Nova Scotia, 1984–85 CILR 418, not followed.

(3) Bank of Credit & Commerce Intl. (Overseas) Ltd., In re, 1994–95 CILR 56, applied.

(4) BankAmerica Trust & Banking Corp. (Cayman) Ltd., In re, 1992–93 CILR 574.

(5) Banque des Marchands de Moscou (Koupetschesky) v. Kindersley, [1951] Ch. 112; [1950] 2 All E.R. 549, dicta of Evershed, M.R. applied.

(6) Bellador Silk Ltd., In re, [1965] 1 All E.R. 667, distinguished.

(7) Bolkiah (Prince Jefri) v. KPMG, [1999] 2 A.C. 222; [1999] 1 All E.R. 517, considered.

(8) Codelco, In re, 1999 CILR 42, considered.

(9) Dunne”s Payments, In re, 1997 CILR 330, considered.

(10) First American Corp. v. Zayed, 2000 CILR 57.

(11) Frankfurt Police, In re, 1999 CILR 1, considered.

(12) H, In re, 1996 CILR 237, considered.

(13) India (Govt.) v. Taylor, [1955] A.C. 491; [1955] 1 All E.R. 292.

(14) Morris v. Director of Serious Fraud Office, [1993] Ch. 372; [1993] 1 All E.R. 788, distinguished.

(15) Norway”s (State of) Applications (Nos. 1 & 2), In re, [1990] 1 A.C. 723; [1989] 1 All E.R. 745, considered.

(16) Tournier v. National Provncl. & Union Bank of England, [1924] 1 K.B. 461; [1923] All E.R. Rep. 550, applied.

Legislation construed:

Confidential Relationships (Preservation) Law (1995 Revision) (Law 16 of 1976, revised 1995), s.3(2)(b)(v): The relevant terms of this sub-paragraph are set at para. 8.

s.4: The relevant terms of this section are set out at para. 72.

Companies Act, 1963, s.345(7): The relevant terms of this sub-section are set out para. 45.

Confidential Relationships-protection of bank”s interest-foreign pro-ceed-ings-Confidential Relationships (Preservation) Law (1995 Revision), s.3(2)(b)(v) applies to foreign proceedings involving non-clients of bank

Confidential Relationships-application to court for directions-locus standi-inspectors conducting foreign public inquiry not ‘court, tribunal or other authority’ under Confidential Relationships (Preservation) Law (1995 Revision), s.4, since not adjudicatory-if inquiry arises from companies proceedings before foreign court, disclosure of information permissible as analogous with disclosure to company liquidators under Companies Law

Confidential Relationships-application to court for directions-locus standi-Confidential Relationships (Preservation) Law (1995 Revision), s.4(6) not definitive of proceedings in which evidence may be disclosed-merely highlights interests typically affected by order for disclosure-not essential to categorize proceedings as civil or criminal

Confidential Relationships-application to court for directions-factors for consideration-bank”s application in context of public inquiry into conspiracy to defraud not abuse of process merely because motivated by fear of public censure and loss of business reputation-bank”s interest in protective disclosure of information to be weighed against interests of clients in privacy

Confidential Relationships-confidential information-information relat-ing to third parties-no disclosure of clients” identities to foreign inquiry investigating bank”s alleged conspiracy to defraud unless specific and provable allegations of wrongdoing against clients-may permit dis-closure of financial information subject to concealment of identities

The applicant applied for directions under s.4 of the Confidential Relationships (Preservation) Law (1995 Revision).

The applicant, a Cayman bank, received notice of an order by the Irish High Court authorizing an investigation into allegations that its affairs had been conducted with intent to defraud its clients” creditors by tax evasion. The order authorized the court”s inspectors to examine the nature

and extent of the applicant”s business in Ireland and on behalf of Irish residents since 1971, to identify its officers, agents and clients, to identify breaches of the Irish Companies Acts and of other statutes protecting creditors, and report on any related matters. The applicant wished to co-operate with the inspectors in the interest of clearing its own name, by disclosing confidential information, including some of its clients” identi-ties, so that the inspectors could seek confirmation from them of its bona fides. With the inspectors” support, it applied for directions permitting it to do so. Some of the clients objected to the disclosure on the grounds that it would be an invasion of their privacy.

The applicant submitted that (a) it was not required to seek directions under s.4, since disclosure of the information was reasonably necessary to protect its interests within the meaning of s.3(2)(b)(v) (an argument subsequently withdrawn); and (b) the court should in any event direct that disclosure of the information requested be made in full, since it was at risk of being penalized by the Irish court unless it co-operated.

The clients submitted in reply that (a) s.3(2)(b)(v) of the Law did not permit disclosure to be made without resort to the Grand Court in the context of foreign proceedings involving non-clients; (b) the court had no jurisdiction to give directions under s.4 of the Law, since the inspectors” inquiry did not constitute a ‘proceeding’ before a ‘court, tribunal or other authority’; (c) the applicant had no legitimate interest to protect in its intention to give evidence and, as a Cayman bank, it had no reason to fear winding up by the Irish High Court; (d) the ‘proceedings,’ if any, did not fall within the terms of s.4(6); (e) the application was an abuse of process, as disclosure would breach the applicant”s duty of confidentiality to its clients and facilitate oppression by the inspectors; (f) furthermore, giving directions might absolve the applicant from civil liability for such a breach; (g) it would assist an impermissible ‘fishing’ expedition; (h) the court should not assist in the enforcement of foreign revenue laws; and (i) since they themselves had done no wrong, the bank”s interests should not be preferred to theirs.

The Attorney General, as amicus curiae, submitted that (a) the public interest would be served by assisting the Irish inspectors with their inquiry, since the Irish inspectors had been appointed to fulfil a function similar to that of the Cayman Islands Monetary Authority; (b) the inquiry constituted a ‘proceeding’ within the meaning of s.4; and (c) the information should be disclosed only on the condition that the inspectors obtain an assurance from the Irish High Court that the confidentiality of legitimate depositors would be protected.

Held, giving directions as follows:

(1) The preferable view was that the provisions of s.3(2)(b)(v) applied so as to permit disclosure of information in respect of the bank”s transactions for or with its clients, in proceedings before a foreign court involving third parties. However, the inspectors” inquiry did not fall within the scope of those provisions in any event (paras. 10–12).

(2) Section 4 contemplated a wider category of circumstances in which evidence was to be used than the Evidence (Proceedings in Other Juris-dictions) (Cayman Islands) Order 1978, governing letters of request from foreign courts. In common with that Order, however, the evidence was to be used for the purpose of proceedings before an adjudicatory body, and the additional words ‘or other authority’ in s.4 were to be construed ejusdem generis with the foregoing words ‘court or tribunal.’ Since the inspectors performed no adjudicatory function, they did not themselves constitute such a body, but as the inquiry was conducted in the context and for the purposes of ongoing proceedings before the Irish High Court under the Companies Act 1990, the Grand Court had juris-diction to direct disclosure. The inspectors” position was analogous to that of liquidators or inspectors appointed by the Grand Court in a compulsory or court-supervised liquidation, to whom the court might order disclosure by a person having information about the company”s affairs under the Companies Law for the purpose of the liquidation alone (paras. 73–81).

(3) The factors to which the court was required to have regard under s.4(6) were not definitive of the kinds of proceedings for the purpose of which evidence could be disclosed under the Law. Section 4(6) merely highlighted some of the primary interests of justice which might be affected by the court”s order. Other factors could be taken into account, and it was not crucial to the court”s jurisdiction that the proceedings in the Irish High Court could not be categorized with certainty as either civil or criminal proceedings. Section 4(6) was satisfied (paras. 82–84).

(4) The application for directions was not an abuse of process. The applicant could not be accused of seeking to serve a collateral purpose in bringing the application, since the purpose of s.4 was to enable the court to exercise its discretion having regard to all circumstances, including the competing interests of persons potentially affected by its decision. If the applicant”s fear of loss of reputation proved to be an insufficient interest compared to others, directions would be refused. Furthermore, its failure to notify all clients of the application would not be regarded as oppressive, since the right to be heard at an ex parte hearing, and conse-quently the requirement to notify potential objectors, was in the discretion of the court (paras. 89–92).

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